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Millstadt Drilling, Inc. v. So. Ill. Explor. Co.

OPINION FILED JULY 12, 1985.

MILLSTADT DRILLING, INC., PLAINTIFF-APPELLEE,

v.

SOUTHERN ILLINOIS EXPLORATION COMPANY ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of St. Clair County; the Hon. Roger M. Scrivner, Judge, presiding.

JUSTICE KARNS DELIVERED THE OPINION OF THE COURT:

This appeal involves two consolidated actions brought in the circuit court of St. Clair County by Millstadt Drilling, Inc., to recover monies expended in providing oil well equipment and services to Southern Illinois Exploration Company, Inc. (S.I.X.). In cause No. 83-L-499, plaintiff was awarded $38,354.88 against the corporate defendant, $10,000 of which the court held defendants Charles Brymer and William Patterson, corporate president and secretary-treasurer, individually responsible. In cause No. 83-LM-1830, plaintiff was awarded $6,000 against defendant Charles Brymer, d/b/a Brymer Insurance and Real Estate, this too representing individual liability on a check given plaintiff in partial payment of the same account on which judgment was entered against S.I.X.

All defendants have appealed. S.I.X. contends that the trial court erred in entering judgment against S.I.X. because there was no proof of an account stated and no evidence of the reasonable value of equipment and services provided. The individual defendants contend that the court erred in finding them individually liable for the amounts above, the first judgment resulting from a check drawn on the corporate account and signed by Brymer and Patterson in their representative capacity, and the second judgment based on a check drawn on the account of Brymer Insurance and Real Estate and signed by Brymer, both of which checks were subsequently dishonored when presented for payment because of insufficient funds.

• 1 We find no merit in the argument made by S.I.X. regarding the proof. The evidence established beyond doubt that from February 14, 1983, through April 28, 1983, Millstadt Drilling furnished certain services and equipment pursuant to an oral contract for which it billed S.I.X. a total of $41,384.88. Each invoice comprising the total amount was submitted as an exhibit and supported by testimony regarding what it purported to establish, namely, the value of services and equipment provided. The corporate defendant was afforded ample opportunity to cross-examine the plaintiff's principal witnesses or to otherwise discredit the alleged charges due. In fact, the trial court made several adjustments to the account alleged in the amended complaint to be due. These included deductions for approximately 207 feet of casing pipe, a salt-water injection-well booster pump and a 15% markup credit for items listed in four invoice exhibits. The initial claim of $41,384.88 was reduced to $38,354.88.

• 2 Defendant S.I.X.'s argument here that plaintiff failed in its burden of proof because it failed to establish the reasonableness of the charges cannot prevail. Aside from being an unsupported assertion, plaintiff's principal witness, Don Dohrman, testified that his agreement with S.I.X. was that Millstadt Drilling was to be paid as the work was completed and that he had done business with S.I.X. for a year and a half, during which time his customary course of business permitted Millstadt Drilling to charge a 15% margin. In short, defendant did not contest the reasonableness of those charges established as compensable; hence, there is no basis for it to assert the same here. The amount awarded is well within the proof submitted.

Regarding the imposition of individual liability for the amounts represented by the dishonored checks, the only indication of the trial court's reasoning appears in the written judgment order wherein the court stated that the individuals "by their actions and by the evidence" are personally responsible. The evidence reveals that the two checks were issued under different circumstances. Because of this, it is necessary to evaluate the consolidated causes separately.

In cause No. 83-L-499, plaintiff in count II of its amended complaint alleged the drawing of the $10,000 check by Brymer and Patterson on the corporate account of S.I.X. to the order of "Millstadt Drilling Company." In fact, the check was drawn payable to the order of "Millstadt Welding" and indorsed by "Millstadt Welding Service." Plaintiff further alleged its lawful possession thereof, its due presentment for payment and the bank's failure to pay. Plaintiff concluded this count by demanding judgment against the defendants for the sum of $10,000 plus interest from April 27, 1983.

Similarly, in cause No. 83-LM-1830, plaintiff alleged the drawing of the $6,000 check on the account of Brymer Insurance and Real Estate to the order of Millstadt Drilling. That check was indorsed by Millstadt Drilling. Plaintiff likewise further alleged its lawful possession thereof, its due presentment for payment, and the bank's failure to pay. Plaintiff concluded its complaint by demanding judgment against Charles Brymer, d/b/a Brymer Insurance and Real Estate, for the sum of $6,000 plus interest from April 21, 1983.

The individual defendants base their defense on section 3-403 of the Uniform Commercial Code (Ill. Rev. Stat. 1983, ch. 26, par. 3-403). That section provides:

"(2) An authorized representative who signs his own name to an instrument

(a) is personally obligated if the instrument neither names the person represented nor shows that the representative signed in a representative capacity;

(b) except as otherwise established between the immediate parties, is personally obligated if the instrument names the person represented but does not show that the representative signed in a representative capacity, or if the instrument does not name the person represented but does show that the representative signed in a representative capacity.

(3) Except as otherwise established the name of an organization preceded or followed by the name and office of an authorized individual is a signature made in a representative capacity."

• 3 According to the code comment (Ill. Ann. Stat., ch. 26, par. 3-403, Illinois Code Comment, paragraph (b), at 222 (Smith-Hurd 1963)), this provision derives from section 20 of the Negotiable Instrument Law and is in accord with it. Defendant argues, and plaintiff conceded, that the $10,000 check obviously signed by Brymer and Patterson in a representative capacity would impose no personal liability on Brymer or Patterson in accord with the rule set forth in section 3-403 and the interpretation of former section 20 of the Negotiable Instrument Law. (See, e.g. Smith v. Reisch (1946), 329 Ill. App. 45, 67 N.E.2d 304; a person signing in a representative capacity, even though principal is not a corporate entity, is not subject to personal liability.) Parol evidence is admissible to show that the person against whom individual ...


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